CME Group Eyes Bitcoin Trading Amid Rising Wall Street Demand (UPDATED) – TradingView News

Editor’s note: This story has been updated with additional details.

CME Group CMEthe world’s largest futures exchange, is preparing to introduce Bitcoin trading, taking advantage of the opportunity presented by the growing appetite for cryptocurrencies among Wall Street money managers.

What happened: Chicago-based CME has been involved in discussions with traders interested in buying and selling bitcoin on a regulated platform, the Financial Times reported on Thursday, citing three sources familiar with the negotiations.

This initiative, although not yet finalized, marks a significant step by the main Wall Street companies in the field of digital assets.

This follows January’s approval by the U.S. Securities and Exchange Commission of stock market funds that invest directly in bitcoin.

CME did not comment on the matter.

Adding Bitcoin spot trading to CME’s offerings, which already include Bitcoin futures, would simplify the execution of basic trades for investors.

Basis trading, a popular strategy among professional Bitcoin traders and commonly used in the US Treasury market, involves borrowing money to sell futures while buying the underlying asset, profiting from price differences.

CME venues currently handle the majority of Treasury-based trading.

Bitcoin has been gaining growing support from some of the world’s largest financial institutions, which have turned from skepticism to advocacy due to the cryptocurrency’s significant recovery from its 2022 lows to record highs earlier this year.

The growing acceptance of the digital asset and regulatory crackdown on illegal market activities have further reinforced its legitimacy as a tradable asset.

Despite a 20% drop in value since its March peak of more than $73,000, Bitcoin-related exchange-traded funds (ETFs) have emerged as the fastest-growing ETFs in history.

Hedge funds like Bracebridge Capital and pension funds such as Wisconsin Investment Board are among the top investors, investing more than $10 billion in Bitcoin-focused vehicles managed by companies such as Black stone BLACK, Fidelity It is Ark.

CEO of BlackRock Larry Fink expressed its “long-term bullishness” position on Bitcoin in March.

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Also Read: Spot Bitcoin ETFs Pocket Net Inflows of $303 Million on Wednesday: ‘The Stars Appear to be Aligning on This Breakout,’ Analytics Firm Writes

Why does this matter: CME has benefited significantly from renewed institutional interest, overtaking Binance to become the world’s leading bitcoin futures market. It currently hosts approximately 26,000 open positions worth around $8.5 billion, more than double the value from a year ago.

The proposed spot trading service would be managed through the EBS currency trading venue in Switzerland, known for its strict regulations on trading and storing crypto assets.

The track record of large traditional exchanges in trading spot cryptocurrencies has been mixed.

While Deutsche Börse launched its digital asset market this year, CME rival CBOE Global Markets recently announced the closure of its spot market business due to unclear US regulations. This highlights the competitive landscape and threats posed by the likes of Coin base COIN It is Robinhood HOODwhich are rapidly increasing their crypto offerings, such as Robinhood expanding its product line in the European market.

A crypto trading executive has raised concerns about potential inefficiencies in CME’s bitcoin trading business, operating in two markets – CME in Chicago and EBS in Switzerland.

“I have a hard time seeing how they would get all the efficiencies available,” he noted.

However, he acknowledged that CME’s action indicates growing comfort among large regulated exchanges with the infrastructure for digital asset trading, including the secure storage of coins.

This evolution in crypto market infrastructure could soon allow exchanges to accept cryptocurrency-related collateral, such as tokenized money market funds, for more timely margin calls.

What is the next: Developments in CME Group’s bitcoin trading plans will be a hot topic at Benzinga’s Future of Digital Assets event on November 19.

The event will explore the growing role of institutional investments in digital assets and discuss the future trajectory of the cryptocurrency market.

Read Next: Crypto Traders Are As Socially Valuable As British Escorts, Study Finds

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